Multiple cases brought this month by State and Federal governments are cracking down on large collections companies that have been working on behalf of lenders to mass-produce lawsuits, misrepresent debt, or improperly collect on debt.
New York (PRWEB) July 31, 2014
Strategic Consulting Services (http://www.strategiccs.org), a New York firm providing client-focused financial consulting for consumers, cautions borrowers regarding a number of illegal tactics that have recently surfaced within the debt collection industry. While scrupulous activity by debt collectors has always been a problem, debt collectors have lately become more sophisticated with technology, which has warranted legal action by authorities. Multiple cases brought this month by State and Federal governments are cracking down on large collections companies that have been working on behalf of lenders to mass-produce lawsuits, misrepresent debt, or improperly collect on debt.
A lawsuit filed by the Consumer Financial Protection Bureau (CFPB) against Frederick J. Hanna & Associates (Case 1:14-cv-02211-AT-WEJ) alleges the firm filed more than 138,000 lawsuits over two years for banks including JPMorgan Chase, Bank of America, Capital One and Discover, without even confirming whether the individuals involved owed debts. According to the Bureau, staff attorneys were allegedly instructed not to spend more than one minute reviewing each case which the law firm assigned. In a related but separate case, a U.S. District Judge ruled that law firm Pressler & Pressler’s reliance on automation and software removed the required “meaningful review” of a collection action filed against a consumer.
In Colorado this month, the attorney general filed suit against the state’s largest foreclosure law firms and two related companies, claiming they made millions of dollars in profit by charging excessive fees to all parties and violated anti-trust, debt collection, and consumer protection laws (Case 13CV033468). One of the firms, Aronowitz & Mecklenburg, has agreed to close the business and pay $10 million. In addition, the principal owners cannot have future ownership interest in any foreclosure law company. Their admitted misconduct is a public validation of the industry’s 'let the consumer beware' attitude.
Also this month in Texas the CFPB announced that ACE Cash Express(Case 2014-CFPB-0008), a payday lender, has agreed to pay $10 million to settle allegations it used harassment and other illegal tactics to push borrowers deeper into debt. Applying false threats, intimidation, and harassing calls, “this culture of coercion drained millions of dollars from cash-strapped consumers who had few options to fight back,” said CFPB Director Richard Cordray. This case is only the second time in history that the CFPB has taken action against a payday lender.
Finally this month in Georgia, the Federal Trade Commission (FTC) halted operations and froze assets for Williams, Scott & Associates, LLC(Case 1:14-cv-1599), who seemed to set a new low in taking advantage of consumers. The FTC accuses Williams of falsely claiming to be affiliated with federal and state agents, members of a government fraud task force, other law enforcement agencies, and pretended to be a law firm. The company called consumers and threatened to collect $3.5 million in fake debt the individuals didn’t owe while violating a long list of protections established by the Fair Debt Collection Practices Act (FDCPA).
“Debt collectors historically have earned a bad reputation while recovering debts owed, which led to the creation of legislation like the FDCPA that protects consumers. Yet decades later there was a clear need for Federal oversight, leading to the creation of the CFPB as an organization that monitors, enforces, and takes action against financial institutions. Coming up on the fourth anniversary of the CFPB’s creation, we are beginning to see real enforcement that wasn’t possible or much harder previously,” says Ben Kittle, Senior Financial Consultant at Strategic Consulting Services. ”While this progress is good to see, there is still much work to be done to reform the industry. The country still needs additional reform, oversight, and control to protect borrowers and consumers of services from large, and often unethical, financial institutions that are not serving consumers as respectable stewards, like they should.”
About Strategic Consulting Services
Strategic Consulting Services is a financial services firm with teams specialized in Debt Management, Mortgages and Business Services. With a comprehensive client-focused approach, the Company provides assessments looking beyond immediate financial issues to help clients build greater financial strength with smart habits and choices. Since 2007, Strategic Consulting Services has helped individuals and small businesses create savings plans, reduce debt, and make wiser spending choices. For more information visit http://www.strategiccs.org.
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